If you want to open a VC account, you must file Standard Form 2804 (Application to Make Voluntary Contributions) with your servicing personnel office, who can provide you with the form. The form is also available at www.opm.gov/forms/html/sf.asp. Your human resources office will forward your application to the Office of Personnel Management (OPM). After OPM approves your application, you will be assigned an account number and sent instructions for making contributions. The contributions must be made in multiples of $25 and the total may not exceed 10 percent of the total basic civilian pay during your federal career. Lump sum contributions may be made and/or automatic deposits can be made from the employee's bank. It is not possible to set up an allotment from your CBP pay to contribute each pay period into an account.

The contributions to VC accounts earn tax-deferred interest, which means that the interest earned on the account is not taxed until retirement. The interest earned on these accounts was 5.5 percent in 2002, 6.375 percent in 2001, and 5.875 percent in 2000. The rate for 2003 has been set at 5.00 percent.

OPM indicates that most people withdraw their voluntary contributions in a one-time payment. If the interest due exceeds more that $200, VC account holders can roll the funds into an Individual Retirement Account (IRA) or other qualified retirement plan to defer income tax.

Visit http://www.opm.gov/retire/html/faqs/faq10.html#voluntarycontributions for more information about VC accounts.